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The changing face of recruitment: small vs large agencies

The recruitment industry has seen its fair share of change in recent years.Technology is fast re-vamping the way in which recruiters source, screen and monitor candidates, Employer Branding is at the forefront of every in-house recruitment initiative and finally, the great global recession that hit us all so hard has diminished - leading the UK unemployment rate to drop to just 7.1%.

It's a figure that has sparked much optimism for industries - not only are there over 30.15 million people in the UK now in work, but the flourishing confidence in the market is spurring smaller recruitment agencies to come through and climb the industry ranks.

As we see the back of the recession, the Simplicity team recognises that these smaller, localised recruitment agencies could really begin to set the cat amongst the pigeons in this changing industry.

Respected recruitment industry commentator Ian Knowlson has a lot to offer in terms of recruitment knowledge. Combining his 30 years of experience working in sales and recruitment and his 25 years coaching and developing - it’s safe to say that Ian knows what he's talking about when it comes to the recruitment industry. He recently spoke to Simplicity’s MD, David Thornhill, to share his thoughts on the changing face of recruitment and what smaller recruitment agencies can offer the industry.

“Recruitment goes through cycles.” Ian says, “We have left a cycle where there was not a lot of jobs but a relative abundance of good quality candidates.” Ian is quick to realise that the new cycle looks set to stay. “Within the last three months, recruitment has passed an inflexion point. There are now more jobs than active candidates - something which we haven't witnessed for a long time” he says, “Providing there is not another global recession, the industry shows no signs of entering the next cycle for at least 15 years.”

The news is long-awaited for job-seekers but it seems the current cycle brings with it a new issue. “By 2020 the EU will see a 23 million shortfall of good quality skilled candidates” Ian says. Think this figure is startling? So too does Ian - “By 2035, China will see a shortfall of 140 million”.

So why, in a world in which technology is making the impossible possible are these figures so high? “90% of all people entering the work force between 2010 and 2020 will merely be replacing the individuals leaving positions.” Ian says, “The ageing population of the western world plays a massive part, the baby boomers of the 50's and 60's are retiring - allowing the Gen-Y's to come through.”

Whilst the introduction of younger candidates should promise a flow in the amount of digital natives entering the work place, Ian believes that the UK is failing to bring through high-skilled qualified workers. He says, “The country is lacking in what will be the core industries - Science, Technology, Engineering and Maths. There are simply not enough students studying these degrees at University.”

This shortfall, it seems, has yet to be realised by the very organisations that it will affect. “This is a macro strategic change that virtually all businesses are oblivious to.”

It isn't all bad news however, as Ian adds, “Those that are aware of the change are the global enterprises such as McDonald's, GE and Google”.

In 2010, Manchester Metropolitan University partnered up with McDonald's to add a corporate degree to their prospectus. As well as its inclusion of McDonald’s, the University's Business School also provides a qualification for super market giants Tesco – a concept which Ian believes will help recognise the skills needed for today. “McDonald’s and Tesco are fully aware of how fundamental talent is. They not only source talent, but secure it”, he says.

With that said, we are left wondering what the decrease in unemployment combined with the skills shortage prediction means for recruitment agencies in the UK. “Larger recruitment agencies should feel threatened. Small, up-and-coming agencies have the major advantage. They are more flexible, agile and most importantly, much quicker to react to such changes in the market.”

Ian's support for small agencies doesn't end there - “Directors and Managers of smaller agencies have a much better understanding of the market and are able to respond more quickly to what job-seekers and clients want and need out of an agency.”

Small and medium sized agencies account for a huge 85% of all recruitment agencies in the UK helping cement their position in the industry. We are now finding that these smaller agencies are able to fill the gaps that the larger agencies fail to do - offering a much more tailored service to their clients and candidates. “Littler agencies cater for a niche market – something which is hard to match.” Ian says, “Industries such as oil, gas and engineering are crying out for employees. You have an agency that deals specifically with such sectors and the reward will be greater profits and margins.”

Ian adds that “The boom in industries such as IT, Oil & Gas and Engineering has been one that is globally overheating with well-publicised shortages.” With jobs readily available and employment figures continuing to swell, it can be said that candidates will become harder and harder to source and maintain for agencies. “With the number of new recruits to these industries showing no signs of exceeding short term demands, it’s clear the role for niche recruitment agencies operating in the sectors is set to continue.”

With the demand for smaller agencies now a necessity not a luxury, what advice does Ian offer for those thinking of taking the plunge and starting up?

“There is no confusion with the economy - it is stable” he says, “With a recession, recruitment is the first thing that goes and the first that comes back. Now is as good a time as any to start an agency – on two conditions:

Know how to recruit. You should have experience within the recruitment industry with particular focus on 2001-2008. Without this you will be learning at the same time as applying.

Within the first 6-12 months of starting up, you need to network with candidates and clients alike. You're let into their world and can understand it. It is essential that they feel supported and as recruiters, we must demonstrate that we have the knowledge to support our clients if we wish to fulfil the role of ‘partner’ rather than a mere ‘commodity supplier.’”

If you meet these conditions then you will of course need cash flow and support - something which Simplicity can offer. With an accumulated 40 years of experience, the Simplicity management team delivers an exceptional level of personalised customer care, helping start-ups to achieve their ambitions.

Undoubtedly, Ian knows what he's talking about, he knows the industry and recognises the potential. 2014 brings with it a massive opportunity for recruitment entrepreneurs. The question is; will you take it?